John McDonnell has revealed Labour’s plans for “rewriting the rules” of business, which include delisting firms who fail to take “adequate steps” to deal with the climate emergency.
The shadow chancellor this morning set out details of the party’s vision for corporate governance, accountability and regulation, bemoaning the status quo in which employees are treated “virtually as chattels” while billionaires accrue “obscene” wealth.
“No one needs or deserves to have that much money,” he told an audience in Westminster.
Central to Labour’s new policies is a plan to rewrite the Companies Act to enhance long-term thinking. McDonnell’s plan would see larger companies given the “option” of “adopting a unitary board or a two-tier board structure”.
The unitary board would include elected stakeholder representatives, while the two-tier board would see a supervisory board made up of stakeholders such as customers, employees and long-term investors, sit above the executive board.
“The supervisory board will have overall power to steer the direction of the company,” he said.
Short-term investors will also be tackled, with McDonnell pointing to the French system where shareholders who keep their stake for more than two years ave strengthened voting rights.
“There is evidence to show that this not only advances long term decision making but also boosts productivity,” he said.
But the “existential threat of climate change is Labour’s overriding priority”, McDonnell added as he confirmed plans to delist firms who fail to come up to scratch.
The Corporate Governance Code and legislation will be amended to set out a minimum standard for listing related to evidencing the action being taken to tackle climate change, McDonnell announced.
Labour will also introduce a raft of measures aimed at the “cartel” auditing industry, including forcing them to publish information about their offshore links, captive insurance companies, political links, audit failures, cooperation with regulators, regulatory action, lawsuits and profits from practices that would be deemed unfair.
Labour has long criticised the so-called Big Four for corporate failings such as Carillion and Tesco’s accounting black hole.
But British Chamber of Commerce’s co-executive director Claire Walker said: “It’s one thing to support employee ownership, stronger corporate governance and a transition to a greener economy, which have had positive impacts on many firms. But it would be misguided to impose a rigid, one-size-fits all approach.
“Getting our economy moving requires serious investment in skills, infrastructure and a reduction in business costs. But extensive government interference in ownership and governance could deter investors and damage confidence.
“Any incoming government must work more closely with businesses to transform the economy to benefit communities across the UK. Businesspeople want to play their part, but success will depend on partnership, not diktat.”
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